Arkansas Legislature: House Sends Tax Cuts To Governor

LITTLE ROCK — Tax cuts that would exceed $100 million within three years received final passage in the Legislature on Friday, as did one tax increase.

The House passed or concurred in Senate amendments to more than a dozen tax-cutting bills and sent them to Gov. Mike Beebe. Most of the bills are part of an agreed-upon package that lawmakers said will total about $10 million in the next fiscal year, $85 million in fiscal 2015 and $140 million in fiscal 2016.

Some of the bills have been amended so that they would be delayed or phased in over time in order to take advantage of savings anticipated from the so-called “private option” for expanding health- care coverage under the federal Affordable Care Act.

Beebe said Friday he plans to sign the tax bills, despite some reservations about their ultimate impact on state budgeting.

“I think they have made some assumptions for 2016, long after I am gone, the third fiscal year from now, that are awful ambitious and rely on some pretty good revenue growth,” he said. “Their answer is, if they think it is going to be there but if it’s not, they’re going to be in regular session and they can make adjustments. It’s my job to warn them.”

Some legislators complained that the tax cuts do not go far enough soon enough.

“I just believe that with a $4.9 billion budget we could have done much more this year to help give some relief to … Arkansas taxpayers,” Rep. David Meeks, R-Conway, said on the House floor.

House Speaker Davy Carter said he felt good about the tax-cut package, which he said would be one of the largest in state history.

“I’m happy,” said Carter, R-Cabot. “If I were king, would I have done it differently? Maybe. But that’s not how the world goes around.”

The bills sent to the governor include:

• House Bill 1585 by Rep. Charlie Collins, R-Fayetteville, which reduces the state income tax in all tax brackets by one-tenth of 1 percent. The cut for the lowest bracket would go into effect Jan. 1, 2014, and the cut for the rest of the brackets would go into effect Jan. 1, 2015.

• HB 1966 by Carter, which would raise the capital gains tax threshold to 50 percent of gains. The bill includes an exemption for capital gains that exceed $10 million.

• HB 1832 by Rep. Darrin Williams, D-Little Rock, which would create a program in which insurance companies could purchase premium tax credits from entities that would invest the proceeds in businesses in economically depressed areas of the state.

• HB 1039 by Rep. Jeff Wardlaw, D-Warren, which would create a sales tax exemption for utilities used by certain agricultural equipment and structures, including commercial chicken houses.

• HB 1399 by Rep. Joe Farrer, R-Austin, which would allow volunteer firefighters to deduct from their state income taxes the cost of equipment they are required to buy and any losses to personal property that they experience while fighting fires, up to $1,000 per year.

• SB 11 by Sen. Gary Stubblefield, R-Branch, which would create a sales tax exemption for supplies for farm machinery.

• SB 135 by Sen. Jason Rapert, R-Conway, the governor’s proposal to reduce the sales tax on groceries from 1.5 percent to 0.125 percent if certain state obligations are reduced by at least $35 million over six consecutive months. A matching House bill, HB 1234 by Williams, has already been sent to the governor.

• SB 298 by Sen. Jonathan Dismang, R-Searcy, which would create a sales tax break for utilities for grain drying and storage facilities.

• SB 334 by Sen. Jake Files, R-Fort Smith, which would create a partial refund of the sales tax replacement parts and machinery used by manufacturers for certain large projects.

• SB 463 by Sen. Jim Hendren, R-Gravette, which would create an income tax exemption for active-duty military personnel.

• SB 791 by Sen. Bill Sample, R-Hot Springs, which would gradually reduce the sales tax on manufacturers’ utilities for manufacturers to 0.625 percent. The tax currently is 2.75 percent, but it is scheduled to increase 3.25 percent July 1.

• SB 853 by Teague, which would create a sales tax exemption for dental appliances sold to or by dentists.

• SB 941 by Sample, which would create an income tax exemption for certain biofuels manufacturers.